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Tomatoes Extraordinaire, Inc v. William J. Berkley

March 8, 2013

TOMATOES EXTRAORDINAIRE, INC., PLAINTIFF AND RESPONDENT,
v.
WILLIAM J. BERKLEY, DEFENDANT AND APPELLANT.



APPEAL from a judgment of the Superior Court of San Diego County, Timothy B. Taylor, Judge. (Super. Ct. No. 37-2010-00085115- CU-BC-CTL)

The opinion of the court was delivered by: Haller, J.

CERTIFIED FOR PUBLICATION

Reversed.

Tomatoes Extraordinaire, Inc., dba Specialty Produce (Specialty) sued Wellington, Inc., dba Jack's La Jolla (Jack's) and its controlling officer, William Berkley, for failure to pay outstanding invoices for produce supplied by Specialty to Jack's. After a court trial, Berkley was found personally liable for Specialty's damages. This personal liability was based on the Perishable Agricultural Commodities Act (PACA), which regulates qualifying transactions in the produce industry.

On appeal, Berkley raises an issue of statutory interpretation, arguing that Specialty did not establish that Jack's was a produce "dealer" within the meaning of PACA to support the imposition of personal liability permitted under PACA. We agree, and reverse the judgment.

BACKGROUND

Specialty, a produce seller, incurred damages when Jack's failed to pay for produce it received from Specialty, and then went out of business.*fn1 Specialty filed an action against Jack's, as well as against Berkley in his individual capacity, to recover the monies owed for the produce. Specialty alleged that Berkley was personally liable for Jack's debts under two theories: (1) Berkley had provided a personal guarantee to Specialty and (2) Jack's was a dealer within the meaning of PACA and hence the PACA provisions (which allow imposition of personal liability on corporate officers who were controlling the operations of the produce buyer) applied to Berkley.

Specialty obtained a default judgment against Jack's. As to Berkley's individual liability, the trial court rejected Specialty's personal guarantee claim, but ruled in its favor on the PACA claim. Based on the ruling under PACA, Specialty obtained a $44,624.91 judgment against Berkley in his personal capacity for Jack's debts.

PACA's provisions apply to produce buyers who qualify as statutorily-defined "dealers." The dispute on appeal concerns the statutory definition of the term "dealer." Berkley argues that based on the plain language of the PACA statute (and accompanying regulations), there are two requirements for a produce buyer to qualify as a dealer: (1) a threshold requirement, showing that the produce buyer purchased produce in "wholesale or jobbing quantities" (meaning at least one ton of produce in any day), and (2) a supplementary requirement applied to retailers, showing that the produce buyer purchased more than $230,000 worth of produce in any calendar year. Specialty, on the other hand, argues that under a proper interpretation of the PACA statute and relevant regulations, a produce retailer qualifies as a PACA dealer if it meets the $230,000 requirement, and that the one-ton requirement is inapplicable to retailers.

At trial, Specialty was represented by counsel and Berkley represented himself. Specialty presented evidence relating to the $230,000 requirement, and the court found this requirement had been met. Specialty did not present evidence concerning the one-ton requirement, and neither party raised it as an issue. After the trial court entered the judgment in Specialty's favor, Berkley filed motions to vacate and enter a new judgment or for a new trial. Berkley (now represented by counsel) argued the judgment was legally erroneous because Specialty had not established the one-ton requirement.*fn2 The trial court rejected Berkley's claim concerning the one-ton requirement and denied the motions.

On appeal, Berkley reiterates his assertion that the trial court's application of PACA in this case was erroneous because Specialty did not establish that Jack's met the one-ton requirement. As alternative arguments, he asserts (1) there was insufficient evidence to support the court's finding that Jack's met the $230,000 requirement, and (2) the amount of damages was erroneously calculated because the court failed to remove items in Specialty's bills to Jack's that were not perishable commodities under PACA.

As we shall explain, we conclude that Berkley's interpretation of the PACA statute is correct, i.e., a retailer must meet both the one-ton and $230,000 requirements to qualify as a PACA dealer. Because Specialty has not cited to anything in the record establishing that Jack's satisfied the one-ton requirement, the trial court erred in applying PACA to impose personal liability on Berkley and the judgment must be reversed. Given our holding, we need not address Berkley's alternative arguments challenging the judgment.

DISCUSSION

When interpreting a statute, we examine the words of the statute, giving them a plain and commonsense meaning. (Flannery v. Prentice (2001) 26 Cal.4th 572, 577.) We construe the language in the context of the overall statutory scheme, with the fundamental goal of effectuating the purpose of the statute. (Id. at p. 578; Smith v. Superior Court (2006) 39 Cal.4th 77, 83.) When the statutory language is susceptible of more than one reasonable interpretation, we may look to extrinsic ...


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